What is the definition of a class action lawsuit?

By on January 4, 2013

A class action lawsuit is a legal proceeding where one or several plaintiffs file a lawsuit against a defendant on behalf of a class of members who have similar grievances.  In order for a class action to proceed, the plaintiff(s) must prove that the damages suffered are similar to that of other people in the class.   Plaintiff(s) generally need to also show that the evidence against the defendant(s) is alike for all members in the class and that separate lawsuits for each member against the company would not be an efficient use of the court’s time, nor would it be cost-effective.

For instance, if a defendant has inappropriately taken $5 dollars from a million consumers, a class action permits one individual who has been damaged to recover the entire $5,000,000 and divide it among the class members.  The individual who initiates the class action is known as the “named plaintiff.”   The named plaintiff drives the litigation and assists attorneys with information for the action and makes important decisions for the entire class, such as settlement amounts.  In some instances in the past a court has provided additional compensation to named plaintiffs in the form of a “class representative incentive award” on top of receiving a pro-rate share of the recovered money.